A mixed prognosis

Sunday

Sep 28, 2008 at 12:19 AM

Massachusetts’ pioneering health insurance reform, launched last year, justly has been praised for reducing the number of uninsured residents and use of high-cost emergency room care for routine ailments. Despite the initial successes, the program’s long-term sustainability hinges on whether the state can keep its cost in proportion to its benefits and whether it can resolve differences with federal health officials over use of Medicaid funds to subsidize care.

In the drive to provide near-universal health coverage, Massachusetts has banked in part on funds from the federal Medicaid program for the poor. Under a special waiver, the state gets Medicaid money to subsidize health care coverage for residents whose incomes exceed federal eligibility guidelines, but who still may be unable to afford health coverage on their own.

The waiver agreement expired June 30, but the state has received numerous extensions. Massachusetts officials hope to receive up to $11 billion more over the next three years, but it isn’t clear Washington will continue to allow Medicaid funds to subsidize insurance for noneligible, low-income residents. Part of the problem is that last year up to $180 million of the federal money went to two Boston-area safety-net hospitals, Boston Medical Center and the Cambridge Health Alliance, to help compensate them for the costs of providing care to patients without insurance.

That may be an unavoidable short-term policy as the state moves toward universal coverage, but open-ended use of federal money to subsidize free care in hospitals is contrary to the purpose and intent of the reform — that is, to shift health care spending from the emergency room to the primary-care physician’s office.

Whatever the federal contribution may be in the years ahead, the effort to ensure coverage for all the state’s residents has already placed a strain on the state’s budget. Extending coverage to the estimated 150,000 people still without insurance is likely to be the most expensive part of the job.

State officials must demonstrate — to taxpayers and federal health officials alike — that the savings in hospital and emergency care that are supposed to offset much of the cost of insurance subsidies for low-income residents actually can be realized. If they cannot, it will signal the failure of Massachusetts’ health insurance reform effort as a national model.

Massachusetts taxpayers have embraced, albeit gingerly, the idea of health care for all. Public support for the program is apt to wane quickly if the cost of the system cannot be brought under control.

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